Will the Bank of England raise interest rates next week?

With much discussion around a potential interest rate rise, we ask our specialist foreign exchange partner, ArgentexWill the Bank of England raise interest rates next week?

Are we going to see the first UK interest rate hike in eight years next week? On Tuesday 2nd November at 1pm, members of the Bank of England monetary policy committee will meet to decide whether the country has shown enough recovery following the recession to warrant a rate rise.

The markets are certainly expecting the news and have already priced accordingly. We have seen Sterling move up against most of its counterparts with the heightened expectation. Britain’s economy grew slightly faster than expected in the third quarter of this year, but is still below its long-term growth rate. As expected the UK’s service sector provide the majority of the growth in the last quarter; with the best performances being in the retail and motor trades. Perhaps most telling though, UK manufacturing returned to growth, we output rising be 1% during Q3.

With this in mind, is the rate hike a given? Yesterday The Pound dropped slightly following comments from Deputy Bank of England governor Jon Cunliffe. Cunliffe suggested the prospect of a November rate hike should not be taken for granted. Having said that, current chances of a November rate hike still stand at 82.3% (Bloomberg).

Because expectation is so high, if the BoE decide to keep rates on hold rather than raising them, we could see a significant move down for GBP. This of course means that individuals looking to purchase property overseas are at risk of their asset becoming much more expensive. The benefit of using Argentex for such transactions is that we are able to put measures in place to remove any risk of downside currency movements.

The timing of any overseas payment is crucial, therefore Argentex provides all of its clients with their own dedicated dealer who will proactively target preferential rates and keep their clients updated on any relevant information.

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